Osborne humiliated as UK loses AAA credit rating

The Chancellor chose to make Britain's AAA credit rating the ultimate test of economic stability. Tonight, he has been hoist with his own petard.

Back in February 2010, a few months before he entered the Treasury, George Osborne declared: "Our first benchmark is to cut the deficit more quickly to safeguard Britain’s credit rating. I know that we are taking a political gamble to set this up as a measure of success." A gamble it was and how it has backfired on the Chancellor. Tonight, Moody's became the first rating agency to strip the UK of its AAA credit rating (downgrading it to AA1), citing the "continuing weakness" in the UK's growth outlook and its "high and rising debt burden".

For Osborne, who chose to make our credit rating the ultimate metric of economic stability, it is a humiliating moment. Not my words, but his. During one of his rhetorical assaults against Labour in August 2009, he warned: "Britain faces the humiliating possibility of losing its international credit rating". Rarely before or after becoming Chancellor, did Osborne miss an opportunity to remind us just how important he thought the retention of our AAA rating was.  When the UK was first put on negative outlook by Standard & Poor's, he said:

It's now clear that Britain's economic reputation is on the line at the next general election, another reason for bringing the date forward and having that election now ... For the first time since these ratings began in 1978, the outlook for British debt has been downgraded from stable to negative.

After it was later moved off negative outlook, he declared:

Last April, the absence of a credible deficit plan meant our country's credit rating was on negative outlook and our market interest rates were higher than Italy's.

By Osborne's own logic, then, his deficit plan is no longer credible.

Tonight, the Chancellor has, unsurprisingly, described the decision as "a stark reminder of the debt problems facing our country – and the clearest possible warning to anyone who thinks we can run away from dealing with those problems". His cause is aided by the fact that the hawkish rating agencies want more austerity, not less. In its explanation of the decision, Moody's cited "reduced political commitment to fiscal consolidation". As he comes under attack from Labour, Osborne will retort, "but you want to borrow even more!" Ed Miliband and Ed Balls, who frequently shy away from making the explicit case for Keynesian stimulus, will need a clear and strong response.

The economic consequences of the downgrade are unlikely to be significant. France and the US, for instance, have seen no rise in their borrowing costs since losing their AAA ratings (in fact, yields on US and French bonds have fallen). All the evidence we have suggests that the market is prepared to lend to countries that can borrow in their own currencies (such as the UK) and that enjoy the benefits of an independent monetary policy, regardless of their credit ratings or their debt levels. But the politics of the downgrade are toxic for Osborne.

Still, you might ask, why should we listen to Moody's, the agency that gave AIG an AAA rating just a month before it collapsed? The answer is simple: we shouldn't. But this doesn't alter the fact that Osborne did. For political purposes, he used Britain's credit rating as a stick to beat Labour with. He can hardly complain if others now use this move against him. Tonight, the Chancellor has been hoist with his own petard.

Chancellor of the Exchequer George Osborne leaves Number 11 Downing Street on December 12, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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The Women's March against Trump matters – but only if we keep fighting

We won’t win the battle for progressive ideas if we don’t battle in the first place.

Arron Banks, UKIP-funder, Brexit cheerleader and Gibraltar-based insurance salesman, took time out from Trump's inauguration to tweet me about my role in tomorrow's Women’s March Conservative values are in the ascendancy worldwide. Thankfully your values are finished. . . good”.

Just what about the idea of women and men marching for human rights causes such ill will? The sense it is somehow cheeky to say we will champion equality whoever is in office in America or around the world. After all, if progressives like me have lost the battle of ideas, what difference does it make whether we are marching, holding meetings or just moaning on the internet?

The only anti-democratic perspective is to argue that when someone has lost the argument they have to stop making one. When political parties lose elections they reflect, they listen, they learn but if they stand for something, they don’t disband. The same is true, now, for the broader context. We should not dismiss the necessity to learn, to listen, to reflect on the rise of Trump – or indeed reflect on the rise of the right in the UK  but reject the idea that we have to take a vow of silence if we want to win power again.

To march is not to ignore the challenges progressives face. It is to start to ask what are we prepared to do about it.

Historically, conservatives have had no such qualms about regrouping and remaining steadfast in the confidence they have something worth saying. In contrast, the left has always been good at absolving itself of the need to renew.

We spend our time seeking the perfect candidates, the perfect policy, the perfect campaign, as a precondition for action. It justifies doing nothing except sitting on the sidelines bemoaning the state of society.

We also seem to think that changing the world should be easier than reality suggests. The backlash we are now seeing against progressive policies was inevitable once we appeared to take these gains for granted and became arrogant and exclusive about the inevitability of our worldview. Our values demand the rebalancing of power, whether economic, social or cultural, and that means challenging those who currently have it. We may believe that a more equal world is one in which more will thrive, but that doesn’t mean those with entrenched privilege will give up their favoured status without a fight or that the public should express perpetual gratitude for our efforts via the ballot box either.  

Amongst the conferences, tweets and general rumblings there seem three schools of thought about what to do next. The first is Marxist  as in Groucho revisionism: to rise again we must water down our principles to accommodate where we believe the centre ground of politics to now be. Tone down our ideals in the hope that by such acquiescence we can eventually win back public support for our brand – if not our purpose. The very essence of a hollow victory.

The second is to stick to our guns and stick our heads in the sand, believing that eventually, when World War Three breaks out, the public will come grovelling back to us. To luxuriate in an unwillingness to see we are losing not just elected offices but the fight for our shared future.

But what if there really was a third way? It's not going to be easy, and it requires more than a hashtag or funny t-shirt. It’s about picking ourselves up, dusting ourselves down and starting to renew our call to arms in a way that makes sense for the modern world.

For the avoidance of doubt, if we march tomorrow and then go home satisfied we have made our point then we may as well not have marched at all. But if we march and continue to organise out of the networks we make, well, then that’s worth a Saturday in the cold. After all, we won’t win the battle of ideas, if we don’t battle.

We do have to change the way we work. We do have to have the courage not to live in our echo chambers alone. To go with respect and humility to debate and discuss the future of our communities and of our country.

And we have to come together to show there is a willingness not to ask a few brave souls to do that on their own. Not just at election times, but every day and in every corner of Britain, no matter how difficult it may feel.

Saturday is one part of that process of finding others willing not just to walk a mile with a placard, but to put in the hard yards to win the argument again for progressive values and vision. Maybe no one will show up. Maybe not many will keep going. But whilst there are folk with faith in each other, and in that alternative future, they’ll find a friend in me ready to work with them and will them on  and then Mr Banks really should be worried.